Legal test of “public benefit” for charities: The Church of Scientology of New Zealand Inc. passes the test

On 30 June 2008 The Church of Scientology of New Zealand Inc. (“CoSNZ”) was registered as a charity by the Charities Commission headed at that time by Mr Trevor Garrett. The now disestablished Commission, recently absorbed into the Department of Internal Affairs, accepted this entity (CoSNZ) as a charity under the third head of charity law – “the advancement of religion” (referred to under the Commission’s terminology as “Religious Activities”). In doing so, the Commission took the legal position that CoSNZ constituted a genuine religion for the purposes of charity law – “religion” defined as being characterised by a belief in a supreme being and anexpression of belief in that supreme being through worship. Re South Place Ethical Society [1980] 1 WLR 1565, Dilon at p. 1572 D-E. [Emphasis added].

However, the Charity Commission for England and Wales, in its well-publicised 1999 decision in which it refused to grant the Church of Scientology (England and Wales) [“CoS“] charitable status; while concluding that Scientology believed in a supreme being, decided that in applying the test criterion of “worship”, it was NOT a religion. The legal criterion of worship would be met, the Commission stated “where the belief in a supreme being found its expression in conduct indicative of reverence or veneration for a supreme being”. CoS (England and Wales) failed this test.

The Commissioners (England and Wales) “considered the activities of auditing and training, which Scientology regards as its worship, and concluded that auditing is more akin to therapy or counselling and training more akin to study and that both auditing and training are not in their essence exhibitions of reverence paid to a supreme being and such Scientology practices are not worship for the purposes of charity law.”

The Commissioners decided that auditing and training do not constitute worship as defined and interpreted from legal authorities.

In direct contrast, the New Zealand Charities Commission Registration Team and officials, having no doubt thoroughly scrutinised the controversial activities of CoSNZ, as well as presumably examined the UK Charity Commission decision re CoS; took the opposite view. Scientology according to the NZ Commission is a bona fide religion for the purposes of charity law.

Clearly both Commissions cannot be right on this important legal matter: the legal definition of “religion”.

Leaving aside the issue of whether or not Scientology constitutes a religion, under the legal definition of “religion” in charity law, Scientologists in their application for charity status with the UK Commission, contended that Scientology served a “public benefit”: the latter a prerequisite for acceptance as a charity (under all four charity law heads). Their case for charitable status was subjected to the “public benefit” legal test and it failed.

In contrast the New Zealand Charities Commission, having no doubt carefully and thoroughly examined the “public benefit” test applying to CoSNZ, took the opposite view: CoSNZ was ruled both a bona fide religion AND one that serves a “public benefit”. This legal position is at complete variance with that issued by the UK Commission, even though both sets of Charities experts examined essentially the same practices of the Church: auditing and training.

The Commissioners for England and Wales, also considered CoS for charitable status under the fourth head of charity law: that it is arguably established “for a charitable purpose which promotes the moral or spiritual welfare or improvement of the community”. They concluded that even if CoS could be ruled as fulfilling this test under the fourth head, it failed under the “public benefit” test. They concluded, with reference to their examination of “auditing and training” that:

“… the private conduct and nature of these [CoS] practices together with their general lack of accessibility meant that the benefits were of a personal as opposed to a public nature. Accordingly, following the legal test referred to above, public benefit had NOT been established.” [Emphasis added]

Again, to emphasis the point, the New Zealand Charities Commission accepted that The Church of Scientology of New Zealand Inc. did pass the “public benefit” test and constituted a bona fide “religion”; while the UK Commission took the opposite view legally on both counts.

It would appear that the New Zealand Charities Commission’s decision concerning The Church of Scientology sets a benchmark as to how it approaches the “public benefit” test for charitable status. Numerous other decisions it has issued that are analogous to this controversial one, provide a clear direction to how charity law in New Zealand has been applied in the last five years with respect to “public benefit”.

The Commissioners for England and Wales recognised that the “public benefits” CoS was claiming, amounted to “intangible benefits”. Whilst recognising that these could be real, the Commissioners concluded:

“…the test [for “public benefit”] was that the whole tendency of charity in the legal sense under the fourth head is towards tangible and objective benefits but that in the case of an intangible benefit that at least approval by the common understanding of enlightened opinion for the time being would be necessary before an intangible benefit could be taken to constitute sufficient benefit to the community [Emphasis added]. National Anti Vivisection Society v IRC [1948] AC 31, Lord Wright at p. 49.”

Clearly, the New Zealand Charities Commission in 2008 considered the “intangible benefits” gained by the NZ public (non-scientologists) from the practices of Scientology, constituted solid and abiding evidence that this “religion” was worthy of charitable status, as it conferred an undeniable (in their view) “public benefit”.